tuesday, may 14th 2013, and "squawk box" begins right now. good monk and welcome to "squawk box" here on cnbc. i'm andrew ross sorkin along with joe kernen. we have mandy drury at the table today. becky is on assignment. we have a number of interesting stories to get you this morning on wall street and in washington. before we do that let's take a quick look at how the markets are shaping up. futures are setting themselves up. dow was open off about 25 points. nasdaq off about almost 4 points and the s&p 500 off about 2.5 points. on the economic calendar today, the nfib small business optimism index is going to bring

us the figures around 7:30 eastern time. >> two hours sleep. >> an hour later export and import prices. then in corporate news hedge fund manager dan loeb is now calling for the break up of sony. he wants the company to spin off parts of its entertainment arm. the businesses include one of the biggest businesses in hole hollywood. loeb is considering the spinoff of sony's insurance division and other pieces of the business. loeb's third point has acquired stakes about 0.3%. by any estimation it is actually now the largest individual shareholder in the company by a factor of two. and loeb hand delivered a letter

to sony's ceo today. he walks into the office and says, by the way, i'm your biggest shareholder this is what i want to do to you and here is my letter and it's all going to be public in about 20 minutes. what kind of meeting is that going to be? >> i like it. >> by the way, apparently the meeting went well very very friendly. it reads in part sony stands at the crossroads of compelling opportunity and massive japanese economic reform. under prime minister abe's leadership japan can regain its position as one of the world's preeminent economic powerhouses. spooking of the plan while third point supports your agenda for change we also believe that to succeed, sony must focus. in a spirit of partnership, we offer our timely plan to strengthen sony.

and the letter includes this third point, would not have made this substantial investment if we did not believe in a bright future for sony's global brand, superior technology, dedicated employees. we are confident that by acting at partners sony will be growing stronger. for sony to change, sony must focus. responding to all this sony is now saying that its entertainment business is very important to its growth strategy. it keeps says it's not for sale it's not for sale. i kind of wonder whether they actually read the letter. there's a couple responses going on in japan and i've been on the phone with a couple of different people. there's a contingent of old school japanese were very angry. they look at this and they say, this is the western wall street billionaire who -- >> who is telling us what had to

do. >> and you know there's a corporate culture in japan. and the corporate culture is a big one, right? you've got this whole idea of lifetime and full employment for everybody versus these days you have to be very mindful of shareholder value and that might mean cost cutting, efficiency. >> but there's a whole group of people this morning who woke up and in the afternoon in japan who said oh my goodness this is unbelievable. this is the beginning of something. >> in a good way, hopefully. >> in a good way. abe clearly represents the beginning of change with how he's dealing with the yen and the tax issues. but then there's structural issue, you talk about capitalism and doing the things that needs to get done and the real question is whether this begins the process. i don't think anyone expected sony to react positively on day one to this but whether the board gets mind this .says,

okay, we have to deal with it. >> and attacking savings in the third world. >> i think it's not in the corporate yet. but yet is the operative story. >> when is the last time someone went in and bought a sony tv? look at the markets they've lost dominance in. i used to have a walkman. did they have any presence on that? we had stringer on a few years ago. he had like 800 different things, gadgets they have working on. >> too many. >> right. like 800. some of them were pretty neat things you would wear on your head, all this stuff. sony was a $50 or $650 billion company. does it ever become the sony that we talked about in the past >> is it's shaded down 13% in the last years. >> you're looking at 1930 by the way 2 1/2 --

>> i think that loeb -- and i don't know this but the speculation is that loeb got in a couple months ago. so he could have got in at 12 13 bucks before it sort of went on a run given what's happened with the yen. we thought japan 20 years ago buying pebble beach, we thought they were going to take over the world. by we myself included in the 1980s, whether they were going to be taking over sony and they're going to be taking over japanese in the future. >> you should have learned english instead of japanese. >> i'm working on it. i'm working on it. cow. >> when are we going to check the markets? >> something else you don't buy danone from the french and you don't buy sony -- or you don't mess with -- but, you know what the most interesting thing is? because they sort of -- the first thing an alcoholic has to

do is admit there is a problem. and maybe some people are admitting, houston, tokyo, we have a problem. >> my sense is that there is a sense n markets that there is recognition there is a problem. and the second piece is if there isn't the type of response you would want even if they don't do everything dan loeb wants to do today, which is unlikely, anyway whether there's enough western shareholders investors who now pile into the stock that actually come the annual meeting next year when all of a sudden everything is up for a vote and you think about the process that it took for him to get the yahoo! board, it takes a while. that if he could therefore get the votes, he says you own 6.5% of the company right now and you see 20%, 30%, 40% of the shares change hands because the western investors get involved then all of a sudden this becomes very interesting and there's a lot more pressure to bear on the board. >> absolutely. where do we go after this? >> i think you're going to see over the next couple of weeks the board is going to take more

to it than just putting out a quick statement. on may 22nd the company's ceo is preparing to put out a new strategy. so we're going to see what that strategy is. we'll see if it's influenced by what dan loeb has suggested and then i think we'll take it from there. and then i imagine they'll put out the strategy dan loeb will put out a new letter saying this isn't enough. >> there's so much focus on the entertainment division that for sony financial which is largely selling life insurance policies that i think is the main moneymaker, isn't it? he was the moneymaker. >> i don't see that there. i don't see the synergy. you know yesterday, sarah palin or something said obama released the irs stuff so that we would stop talking about benghazi because that's going to be really serious. did the "new york times" do this because of the ap story over the

abortion thing? why do you think this has nothing to do with the smoke screen for the other big news? there's scandals left and right and all we're talking about is sony. >> there's a premeditated plan here. maybe dan was in on it but dan has changed allegiances politically. >> i asked whether the justice department was tapping the "new york times" phone lines just to get talking points for the obama administration, whether it's to hear the way they were sort of selling things. >> they're becoming my phone. >> it's a big conspiracy theory. >> and with you, as are the bloomberg terminals. >> but, you know the walking dead the govern is british. he talks southern. and rick the star of the whole series is english and talks like an american. you could do it. >> saying what's wrong with me? >> no, you don't want to obviously. you don't want to talk like the rest of us and -- because you like --

>> well, it's good being a little different. >> i know you could. you could talk -- >> i might as well have abdomen accent. >> you could sound like you were from alabama if you want wanted to. >> y'all -- no. are you offering to be my voice coach? so i'm going to end up speaking like you? >> right this. >> the rain. >> the rain. >> in spain. >> in spain. >> try this. carl. carl. >> carl. >> carl quintanilla will cover the markets. >> carl quintanilla will cover the markets. >> no say it how you normally say it. >> carl quintanilla will cover the markets. >> are you messaging dan loeb? >> i am not, but i am messaging a secret source. >> source or source? >> great job. >> you put us on the map put cnbc on the map. >> thank you. >> and you got two hours of sleep, so congratulations.

>> you know what i don't understand? did the "new york times" get mad that we broke it on cnbc instead of -- >> no no no. everybody is into this. we know who the "new york times" is in cahoots with. >> all right go ahead. >> you've got news. >> in other news this morning, more bloomberg clients are asking questions in the wake of the privacy leak. bloomberg's ceo daniel doctoroff has posted an apology on the website. meantime, the ft is reporting more than 10,000 private messages were put online and fully available for anyone to browse. including confidential messages to traders and their clients are said to have been online for several years. am i do understand that

doctoroff, he personally reached out to over 3,000 clients to explain the situation, to apology guise apologyize. >> and most investors who came on the show yesterday talked about it's an elthiccal question. but i don't know if it's going to change the business. i don't understand the ft story. do you understand that? >> yeah more than 10,000 messages sent through p cz@users? >> and it was posted on the website years ago. >> and how did that happen? >> and how did that happen? >> who is it? >> so it's unclear to me is that a reference to there's a larger security problem at bloomberg? was that a one off? it seems to be a completely different situation, by the way. >> it does. but spans the concerns of privacy. but it helps to have such a phenomenal terminal. >> it did. they need it. >> it's like people can't --

>> they might want to but they can't. >> but the people that use their terminals hate the idea that they wouldn't have it. but i mean i guess it's -- i remember when we had them here and we didn't think we could -- we finally did. it's been like ten years since they moved the terminals from here. but i remember how great they were. they are amazing. >> an incredible tool. >> yeah. >> this one is interesting, andrew. i'll tell you what was interesting yesterday was the left started to throw the president under the bus. normally it takes a lot for them to do that. and i guess it started a little bit with the irs, but then especially this one. this one the ap story, you can't have leakers. i can almost see how you would want to identify who in your inner circle maybe was -- i can almost see how you could justify this. >> you see, now the left finally

comes to my side. >> but in washington -- yeah. you can't. the justice department said two months of telephone records of associated press reporters and editors. the ap's top executive is calling this in his words a massive and unprecedented intrusion into how that news organization gathers the news. the government is said to have seized the record in more than 27 record lines ap journalists in april and may of 2012. it had to do with -- i don't know, some guy was building a bomb over in the middle east. >> yemen. >> yemen. and i don't know some identity was released somewhere and they thought it was a leak and they've been very -- >> so did you think -- so you're saying you think they should have been able to tap the phones or not? >> i don't know what i'm saying. >> you're saying it's okay. >> there's a lot of people that the whole patriotic act they thought was a big infringement on rights.

and i guess there's certain -- you know, it's a slippery slope, obviously. but if you're not doing anything, you probably don't need to worry about it, i would think. >> except in this situation. >> and it includes home phone lines, cell phone lines. where is the line between, say, an offer -- >> don't get me wrong. i love to see them swimming from this. but this is -- >> to me the problem becomes if they learn something on those lines, unrelated, and then they use that information inappropriately. >> that's the big issue. >> how woulder still holding that position? that is sort of the impunity with which -- >> we saw eric holder together. >> i know we did. does what does that mean? >> did you chat with him? >> i did. it was a good joke. the best joke was the president said that when he says how good looking the california attorneys are, eric holder is really -- the president said that.

that was pretty funny. >> that is funny. time now for the global markets report. ross westgate is standing by in london. ross, they're trying to get me to speak like an american here. you're next, by the way, on the list. >> what's this language called again? >> what? >> what's the language called again? >> australian. >> ross. ross is kind of -- you see, we -- he's kind of the father language for america. i kind of defer to him, the queen's english or the king's english or whatever it is. didn't they send a bunch of prisoners and comics down to australia? >> that's exactly right. we were the rejects that britain didn't want and look at us now. so, ross what's coming up? what's happening with the global markets? >> i like that. well done. we are a little weaker ahead of the u.s. open this morning. and around about 5 to 4 advancers being outpaced by decliners at the moment. very slim gains yesterday for

the ftse up 6 points. we had some slim losses this morning, just down 8 points. pretty flat over the last couple of days. conservative party, not the government, but conservative party is going to launch to see whether we could get it into law a referendum on britain's -- by the eu by 2017. track that discussion. it might be hard to get it in because there's not much support from it for the coalition partners. the cac 40 down 0.3%. the xet ra dax down 11 points. the ftse mib down 0.14%. you can see on the sectors we're weighted media, basic resources are the biggest losers. eads is the stand out. operating profit jumping more than expected. passenger jetmaker airbus of course raising its most profitable plain output. had some weakness in the helicopter division, but investors like what they heard this morning. up 1.8% this morning, as well.

and we had an auction out today from spain. a t-bill auction, but it was the sense of lower yields at auction in may than we had in april. ten-year spanish yields up 4.293%. italian yields have come back down. we have the zew investor sentiment survey out of germany. a little weaker than we had expected. that's it. that's where we stand. really a medium private price level action as we go towards the levels. >> it sounds like a meh price level action right? neither here nor there. >> these taking on this sort of whole american thing. >> is that what that was? >> people are already writing in. >> no, i'm getting people writing in saying tell joe to shut it, that the aussie accent

is who i am. >> part of your charm. >> there you go. >> i saw that one, too. it was included on there. tell at joesquawk to shut it. >> thanks, ross. >> i was looking to see his other tweet, he said bush did it is getting lame as a defense, so i can he's going to -- >> he's going to stay. >> yeah. >> he's going to stay. >> we'll be tweeting during the break. coming up, a weakening yen in recent months to today's news on dan loeb calling for a sony break yun. we're going to talk all things japan right after the break. but first, if you want to have coffee with tim cook get your bid in right now. the auction to have a cup of joe with the apple boss ends today at 7:08 p.m. eastern. charity buzz is auctioning off a 30 to 60-minute coffee break. i guess if it goes well you get 60 minutes. if it's a problem, 30 minutes.

>> second price is 30 minutes. >> to benefit the rfk center for justice and human rights. at last check, the current bid is $605,000. >> you're kidding me. >> warren buffett has gone for over half a million bucks.

welcome back everybody. lewis says gold marn has failed to link pay with performance. let's take a look at what's happening now with the weather channel's mike seidel. >> over to you mike. >> good morning, mandy. another chilly morning in the northeast. at least it's not showing this morning look it was yesterday in syracuse and big hamiltonhamton. speaking of warm today, minneapolis st. paul was sending temperatures up into the low 90s. warmest day so far this year. but not quite a record. warmest day, could be a few showers along the front. 103, a little above average in phoenix. it's going to stay triple digits in phoenix. and one more cool day in the northeast. only 62 in new york. about 10 degrees below average as the beautiful weather

continues down south with 70s and 80s and low humidity. getting into tomorrow the middle of the week may have some severe weather around dallas, small chance of a tornado. with this warm front crossing the commonwealth of pennsylvania, some showers and thunderstorms. flood gates open up for the warm air. cooler in minneapolis, but finally getting up to near 80 in chicago. here comes the warmth towards d.c. mid 80s in washington. those of you in new york boston, philadelphia will be in the 70s and 80s for the rest of the week. and the rest of the country is pretty quiet. and in southern california, temperatures in the 70s and 80s. here you go, and ru. finally, warm air coming up to you guys in new york city. 24 in saranac lake. >> wasn't that a record andrew a codest night ever in may on the east coast? >> i don't know about the entire east coast. i can tell you one of the wild weather stories we get, and we also put fargo in the mix, fargo

between sunday and yesterday went up 20 degrees. thank goodness it's not snowing this morning there in upstate new york. i think we're done with the snow. let's hope so. >> thank you for that. we haven't had any snow but i would like some 75 80. but it's probably going to go straight to 90. we've got nothing -- that happens a lot in -- >> you know my sister now lives out in denver. i think i told you. there was snow. >> i know. >> 300 days a year. it is nice. we're going to go overseas to japan. the nikkei slipping into negative territory for the first time in three sessions. the dollar dipping against the yen after finally striking that all-important 100 mark. joining us now from singapore this morning with his take on the japan story is adrian mowatz, the chief asian and emerging equity strategist at

jpmorgan securities. good morning to you. >> good morning. >> let's talk if you could, about this sony story because we want to hear sort of on the ground what is the view of dan loeb attempting to make a play here with sony? >> we haven't cleared sony for me to discuss. let's just keep it with regard to japan and that story. >> that's one way to do it. are you working with sony? is jpmorgan conflicted for that reason or does each of the issues or stocks have to get cleared through the bank first? >> it's pretty strict regulations with regard to speaking on companies in hong kong and singapore. i can talk about them if it's been cleared. though it hasn't been. >> you've been begging for these. >> we can talk about jpmorgan

and -- >> the analyst think it's very important that we obey the regulations. >> let me ask you -- >> ask him about jpmorgan. that's a good idea. >> we've been talking about jamie dimon this morning. different question then. >> i'm sure it will improve my career so far. >> you're doing great. talk about this more broadly. is japan ready for the type of activist investments that we've seen in the united states? structurally are the companies prepared to made hard choices that abe has allude to? >> i'm not sure if the companies are ready, but that's the whole point of activist investors, isn't it? it's to shack things up. so i think it's ultimately a very very good thing. and it is sort of the final stage of abe-nomices is to get reform through and part of the

re form is corporate reform. >> hello, adrian. he used to come on as a guest on my show back in the singapore days. good to see you again, adrian. how much of this shows the increasing interest by western investors in the japanese stock market? and it's finally obviously coming to life along with the economy. i think it's up by what over 40% year-to-date? how much more do you think you can run on the japanese stock market and how much will that be thanks to western investors? >> well i certainly -- the western investors have been key in driving this. we've had our local clients that have been net sellers. that's partly because they need to rebalance their portfolios and have a relatively amount of fixed bonds. so it's been crucial. but japan at the moment is all about policy. chapter one with yen depreciation. chapter 2 is mr. kuroda with his qqe quantitative and qualitative

easing, this purchasing of 6 times of issuance of jgb. it's definitely the biggest macro event of the year. .i think that is going to drive this equity market higher. and i think it's also going to drive deflation out of japan. it's very exciting. >> so what happened if the yen's depreciation depreciation slows down? we were sitting at 1.02 yesterday. what if that slows down? will the japanese stock market gains slow down? >> no i don't think so. i think the yen depreciation is the start of the story. it's boosted corporate profits for those sensitive to the yen. that is being turned into hire bonuses for employees who now have nominal income growth in japan. the other thing for the household sector is to stop company prices falling. so what the bank of japan is doing is deflating flavor out of low risk assets like japanese

government bonds. and one of the assets they're going to move into is real estate. you have a 6 of% yield on a condominium in tokyo at the moment. we stop hayreal estate prices falling. we start to see quite strong retail sales. we get nominal growth in japan. the balance of the corporate sector sees a boost in the profits and maybe we've got a sustainable recovery. >> adrian real quick, here in the u.s. when it comes to qe and qe infinity there's a conversation that maybe we've got too far. there's a bit of a worry that this is all going to end badly. what's your worry about that in japan? >> i think it's going to be a very uncomfortable stage when we get qe exit or whatever the latest phrase is. but at the moment you know japan is an extremely early stage. mr. kuroda spoke on the fourth of april. we've only had actions for about three weeks on the bank of japan.

so it's a bit premature. we like to think about the bank of japan as building a bridge to the end of deflation. and i'm not sure whether that bridge is long enough. but at the moment they're making progress and i would advice that investors stay invested in the japanese equity market and take part in that. >> yeah. 20 years, they say, you know maybe we should do some qe over here. right? it's only be 20 years. 20 years. i'm thinking long and hard about maybe that's the right move isn't it? >> the bank of japan last year sent 90 minutes telling me how bad qe was. so the bank of japan was a real barrier. and that's why prime minister abe needed to come in and change the governor and the two deputy governors.

and under mr. kuroda we clearly get a different bank of japan policy. >> and mr. kuroda wants his helicopter back. i think it's more than a helicopter. >> adrian thank you very much and thank you for playing along. >> he followed the rules. >> it's good. he's been on a lot. did you watch the president and cameron yesterday? >> i just saw a clip. >> you know the financial times, do we have a -- with them or something? >> we might. >> by the way, we have a dole with the "new york times," too, and that hasn't stopped you, so go ahead. >> obama voices furry at tax probe claims? furry is a word that -- did you see fury? >> fury is not the right word. >> he's really mad they were

targeting the tea part. he said, oh don't target the tea party. there was scandaling going on here. coming up european shares trading lower this morning on weaker than expected investor confidence. we're going to talk to global markets with mark grant. he's here in the house. and then the mock turtle i think. in the next hour the newsmaker this morning named hedge fund manager david tepper. remember he said either the fed will act, the economy itself will go up or the fed will keep acting. >> and every time, he was right absolutely. >> let's find out where he is today with an extended interview starting at 7:40 eastern. first, here is a look at yesterday's winners and losers.

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welcome back to "squawk box." joining us on set, mark grant is in studio today, managing director at southwest securities. >> not in florida. >> not in florida. >> complaining about the cold? >> yes complaining about the cold. it was keeled koeld in florida, too, not what long ago, right? >> it was 80 when i left. >> you had other things going on up here, right? >> lots of things. >> i feel lulled into a false sense of security about europe.

you're still worried. wouldn't we see something in the interest rate sectors in italy or portugal? isn't the market telling us things have calmed down? >> no i really don't think so. the fed and the ecb and the japanese banks have come into a tremendous amount of on money have to go somewhere. so it's going into the sovereign sovereign. it's the same thing. the impression in the bond markets, equity markets going up. so there's amounts of money. >> has time made them less insolvent than they used to be? >> i think you could say that accurately. we're not at the danger point than we were at one point. there's still some concerns. portugal is going to come back greece is still getting money. spain is still in trouble. but it's nullified. i think that would be accurate. >> we had roger oppenheimer on

last week and he went off big time, right? he did. he speaks the truth. >> also talking points from the west. >> exactly. no, from the left that the austerity was somehow like we decided to choose austerity and that it was an ill timed choice instead of the markets basically forcing austerity on a bunch of countries that couldn't borrow any more money to pay the bills because borrowing rates went so high because the markets said you're insolvent basically. >> there was a tremendous amount of concern and then you had the hedge funds betting. and then with what the ecb did, there's no way to be short the sovereigns, so you had the low. but then he had the financials of spain and france that are in big trouble and then you have the market here. so you have this great disconnect. >> at the foundation of the eu crumbling right now? >> yes. you could absolutely say that. >> nor the benefits that were promised by the formation of the

eu viewpoint just haven't come to fruition the way they were expecting. >> that's one of the issues going on in the uk right now. they're having this whole back bench -- >> was going to happen? >> we'll be mad if you pull out or something? >> obama warnings wham ron that britain would lose influence in the u.s. if it pulls out of the eu. he has threatened he would remove that churchill bust on the white house. >> that's not going to hold -- >> he already did that. i'm sorry. >> when did this all happen? we've been talking about this for a long time. there hasn't been a tipping point. dan loeb who made a small fortune buying up greek bonds. frankly, had he listened to a lot of the conversation over the past year he wouldn't have necessarily done that. >> are you tying this back to your story again, talking about dan loeb?

>> dan loeb. >> he broke a big story last night with dan loeb. >> did you mention too big to fail? >> definitely not the movie. he could have a cameo in the new paper back. we're updating that and it will be available on -- no. >> do you feel like you missed some of the move over there recently? >> no. i'll tell you what when i first warned about greece it was january 13th january 13th, 2010. we've never seen that level again. i'm talking much more with investors, insurance companies, money managers big ones all over the world. these guys are doing what dan does. dan is a speculator and that's type. that's part of the markets. and also this thing could have gone the other way. you have to be careful and watch your money. you don't want to lose your capital. >> what are you advising people right now? how would you make money in europe?

if you happen wanted to? >> well i think europe is very problematic because, as you just said and i think you're absolutely right, the underlying fundamentals, france, spain, all the countries except for germany are terrible. so i think it's very difficult to do that. what i've been saying recently is because the fed is influenced the move is to look at cash flows. in other words, you get 5% or 6% on bonds, take the cash flow. you know at some point the bonds say if it's going to drop to 90 you don't care. you get the cash flow and reinvest the money, regardless of the markets. >> are you feeling a tapering coming sooner rather than later? >> yes. i think the fed is going to -- >> because the rumor providing something last week it might be summer. everybody is ready to believe it at this point, which makes me think that unless we had a real pullback in economic growth they seem like they're starting to get a little bit nervous with -- >> i wrote a piece in between

us, i guess the whole world is watching, but i wrote this piece about the fed .what the fed should do. there are a number of people at the fed at the board of governors that get what i write and read it. so i gave them a template to how they should begin this and they did not pay attention to it. >> summer? >> lay may, summer, something like that. >> late may? >> it already is the middle of may. >> i get a thousand e-mails a day and -- >> when yours comes, everyone -- >> you know why, though. it's never good news. it's never like wow, something good happens happened in europe. it's, oh what's this? >> do you not send stuff if it's positive? >> no. i send stuff if it's positive. but out of the box is warning people to be careful. retain your capital. >> i know it's important. >> and i don't have anything -- >> no i know.

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research firm this morning that it called bubble watch. we're only just starting to talk about a sustainable housing recovery. please don't tell us we're heading towards bubble territory. >> we are not, pandy. right now, prices are still 7% undervalued relative to fundamentals. that's even with the big price increases we've seen over the past year. prices fell so much after the bubble burst that even prices rising now, they're still below the fundamental values. >> even though we're sort of seeing in areas like san francisco, las vegas, home prices rising more than like 18%? it's coming off a very low base. >> it's coming off a very low base. there are a few markets around the country where prices are a

little overvalued. orange county, california prices look to be about 9% overvalued compared with fundamentals. austin texas, which barely had much of a housing crash, prices are overvalued. also a little bit, about 7% but most of the country, 91 out of the 100 largest metros, prices are bro what we think are the fundamental values. interest what would make you start to fear that we are getting into bubble territory? >> if we had two or three more years of price increases like the past year then i'd start to worry. but i don't think that's going to happen. we're probably going to see more inventory coming on to the market and with more supply, that could slow down some of these price gains. so investor is interest is probably going to fade now that prices are rising more. >> pockets of bubbles, can't there be places where we are in a bubble? >> absolutely. there could be big differences. at the last -- in the last deblg aid, we saw prices overvalued by

60%, 70%, 80% in california and parts of florida. while only overvaluing a few percent in parts of texas and upstate new york. there would be huge local differences. orange county is 9% overvalued. compare that to the market and it was over 70%. >> 9% does not cover the traffic jams. >> doesn't make it worth it. >> no. it really doesn't. >> jay, thanks very much for that. >> thanks very much. coming up, comeback companies. a special cnbc report looks at yahoo! yahoo!. and david tepper. and tea parties. i'll have more awkward conversations than i'm equipped for, because i'm raising two girls on my own. i'll worry about the economy more than a few times before they're grown. but it's for them, so i've found a way. who matters most to you says the most about you.

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welcome back. we have a cnbc special report on comeback companies. john fort joins us this morning with a look at yahoo!. good morning, jojohn. >> hey, good morning, andrew. yeah after a revolving door ceo, microsoft acquisition, yahoo!'s story is shaping up to be a story. marissa mayey is warning investors that it will take years before her strategy clearly takes shape. the home page has been redesigned. smartphone apps like weather on the iphone have gotten a face

lift. one of the goals for the changes, to make yahoo! cool again. stocks 70% since mayer took over 10 months ago. large part thanks to the eye for talent. the company has done quite a few acquisitions which seem fainly focused on yahoo!'s bench of mobile tower. analysts say so far so good. >> i've known marissa for a long time and i knew her at google. one thing she always did extremely well at google which she is doing at yahoo! too, is building teams and hiring people. >> the company still faces a lot of hurdles. i'll be back with a half-time

report at noon. >> thank you, john. just to tie back to dan lobe. i was going to ask about sony. do you think lobe has a chance to mix things up here? >> well ordinarily i would have said no. as you pointed out with all the changes taking place right now in japanese government the effort to shift the bureaucracy, maybe some of the protection of japanese workers, there's more of a shot now given the drop in sony stock. the culture of protecting people very strong. not just sony. other companies too. >> thank you very much. see you soon >> coming up news maker of the hour. david tepper. where he is putting his money to work right now.

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time for tepper top. find out if he thinks this market momentum can continue and what he's doing to position his portfolio for success. bloomberg fallout continues. messages and information was leaked outside the company. we'll have the full details of that >> plus your morning headlines as the second hour of "squawk box" continues. good morning and welcome back to "squawk box" here on cnbc. along with joe and amanda i was

going to say mandy. >> the first time we can do it a little more formal. >> like mr. kernen. >> amanda drury. we get more familiar. >> what's the next step. >> nicknames. >> a pet name. >> nicknames. >> i don't have a pet name. well, i probably do. >> we don't let you know. >> becky is on assignment today. mandy will be with us the rest of the program. dow will open 28 points nasdaq 6 points s&p off 3 points. investor carl icahn proposing 12

for dell board, including himself. buy outbit. a dell special committee has been calling to buy more details on his proposal. perhaps this is one of them. i don't think it will answer all their questions. >> verizon and voda phone are the recipients of an unexpectedly large venture. they are paying a $7 billion dividend next month. more than many analysts expected. this comes amid speculation that they will make an offer for a 45% stake. probably makes it less likely that a transaction happens. >> the story two weeks ago -- >> they were with holding. >> right.

maybe this is to make nice a little bit. i don't think you'll see a transaction so quickly, but i've been wrong before. >> verizon, sprint t-mobile and att teaming up are forming a campaign against texting while driving. at&t and verizon. the message from the major carriers is the best way to discourage. i remember driving with you, joe, when you had a blackberry. >> is it siri? >> no. it doesn't work that well on an e-mail right? you say something and the person will get it and go what are you talking about? >> it can wait. that's what the ad is saying. they should like a mother that

lost their daughter orson. they show the last message they had typed in before they slammed into a semi or something. they're effective and good. and it's good public service. let's get you call the up on corporate news. hedge fund manager dan lobe is calling for a breakup of sony. he wants to spin off parts of its entertainment arm. he is recommending sony sell 15% to 20% stake by offering subscription rights to shareholders. he is considering the spin-off of the insurance decision. a stake of 6.5% and sony making him one of the biggest shareholders, if not by the

largest by a factor of two. lobe hand delivered a letter to sony ceo in japan today, just a couple hours ago outlining his proposal. it read in part sony stands at the cross raordz of compelling corporate opportunity. japan can regain its position as one of the most economic power houses. loeb goes on to say, while third point supports your agenda for change, we also believe that to succeed sony must focus. when people say partnership, we were talking a little mafia don. we want to be a partner. it would not have made the substantial investment if we did not believe in a bright future. we are confident that by acting as partners sony will grow

stronger. for sony to change sony must focus. responding today, sony says its entertainment business is supportive and says it's not for sale, which is to be expected. while the program has been going on sources are telling me that is very likely that sony's board will meet the next couple of weeks to figure out how to respond to this. a week from now sony has to put out its annual big strategy presentation. this is the beginning of a long. >> this is a long perhaps tortured process. again, it has to do with what's going on in japan. we talked about the yen and whether this is the last piece of the abe puzzle. >> it's a sign of the times. after 20 years of economic stagnation they get the idea. they shake up the corporate culture as well.

do you know when we first bought shares of sony? is he up or down? >> oh, definitely up. by the way, anybody who bought into virtually any japanese company, i think -- he's saying by the way, he sees 60% upside in the stock if they were to follow through. each of the individual businesses we talked about sony financial. it is an insurance business. >> maybe apple focus on a couple of products. 600 products. everything. including the sony kitchen sink.

>> there are some pretty interesting pieces coming out of japan this morning about this. i'm surprised. i thought there was going to be more hesitation. there seems to be an embrace of wall street is here. what does this mean to japan. we will see what the market does over there tomorrow. >> we will indeed. yeah. okay. let's check the markets this morning. start off with what's happening with oil prices right now. wti is currently down. it's below 95 bucks. the stronger dollar has been wreaking havoc with commodityiescommodities. it continued its rise as the best three-day winning streak in a year. the dollar however, is today, we're seeing dollar/yen 101.5. gold is currently 1426. it is marginally to the down side by 8 bucks an ounce. >> let's talk more about the

market. are the bulls ready for a breather? i don't know. is the market ready to take off again? we're also ready for because it's moved up so much. we have sort of framed every discussion for the last nine months about whether that's going to happen. we're helping to build it. let's see. but let's not put words in our guests guests's mouth. so allison, i am totally neutral what you are going to say here. i have no idea whether we're near the end of the rally. you go ahead and decide.

where are we? >> the market has to take a rise. valuations are getting up there. the market is not expensive but not as cheap as it used to be. >> you have to admit you have been bullish. you would have to talk credit for being bullish. how long have you been saying the market is ready for a breather? >> i started saying it around sequester. i started saying it then. >> like a lot of people. at the end of last year i liked it. i'm looking at valuations of 15 times earnings. the fed might slow down quantitative easing. if we have a backup in the bond market it would put a damper on activity. >> how about you? >> i hate to be boring but i have to agree. i've been here a few times this year on the record. very positive on the market. but at this point really there's

no stone left unturned. even tech stocks which had been under performing had this miraculous bounce. i don't think you quite had the visibility on the recovery to justify the sick cal leadership. people don't want to chase it. if you can't find an area that looks compelling it's impossible for the market to go higher. for the first time in the last week the market has stopped going up. it's not going down but it's not going up. >> you said skwroerbgs as you know -- i don't remember. you never said breather. you were bullish for the last three or four times on unequivocably bullish.

>> now on "squawk box" you talked bit with people for the last week or so. >> you have a target for the s&p of 1670. what's going to give us the next leg up? >> 1670 is only a couple percentage points where we are now. in the short-term because it's may, the market needs a bit of breather breather. price have gotten a little ahead of fundamentals. look to next year to justify bidding the market up much more. let's at least get second quarter earnings under our belt. this shouldn't be a shocking statement. we're up 15% this year. you know we just need to kite a little. >> we just said people that -- the entire way have been saying i wouldn't commit any new money now. they can say it for 15%. they will never say now is the time to do it. we finally get a correction up 2,000 or 3,000 points and they take credit for that, even though they have been out of the

market 3,000 points. >> the problem is part of the issue is lack of other options. you can get to a 16 type multiple on the market which gives you another 7% 8%. you're more worried about the bond market. when you look at the fact there aren't great earnings out there, momentum is slowing down. people are under invested. this looks better on a relative basis but not a lot of promising up side. it's a challenging time. >> it doesn't make any sense. >> you mean for bond? >> we're playing against the government. >> it happened four times. no for four years. >> on treasuries, everyone has been wrong. maybe we wait for everyone to throw in the towel and stop trying to predict the rise in 10-year yields. >> 3.5% everyone said they were

an abom nation. >> it's probably the least profitable. >> if you're looking for asset class, as andrew puts it that's an abom nation, where would you be be looking? >> we have had it. but there's only 7% or 8%. i still say somewhat exposed to u.s. equities. i would invest a bit overseas. some of the higher yielding areas are attractive. corporate balance sheets remain strong and healthy. >> i think domestic u.s. has the best momentum. maybe defensive in the u.s. is a theme too. we like health care and discretionary. a lot of risks are coming overseas. the reason commodities have been lost, europe lousy. china, lousy.

the markets haven't done that badly. >> might we be at a turning point? we are starting to see rates coming down. south korea, australia, ecb cutting rates. when will things start to move up again. >> we talked about how do you spell money people have lost trying to short treasuries. the market is a disaster. >> we have been together about sony and dan loeb all morning. where are you on japan? >> obviously it's been a monster. it's becoming more of a show story. given how pedal to the medal, they are, it's hard to see them backtracking. japan is a bright spot. whether it can continue at the pace it has been i think you can

debate. certainly it looks a lot better than europe or china. >> okay. all right. we will talk to david tepper. september 24th 20 when he came on. >> right. >> big tepper rally. he said will the economy improve or the fed will make it improve. if you go back and look at where we were in september, we were at about 1140 or so. we're at 1640 now. >> did you read that article that he sent us last night? >> i did. i asked you to read that. >> i read it. >> what do you mean did i read it? >> i said you could benefit from this. we have been predicting so many different things. from global warming. population. running out of raw materials.

>> we're going to talk about it. depends, questions, about anything you see here. e-mail us or follow us on twitter. coming up next more fallout from bloomberg breach. messages have been leaked online amid privacy concerns. keep it locked here because david tepper is joining us at 7:40 eastern for a very special interview. everyone's retirement dream is different; how we get there is not. we're americans. we work. we plan. ameriprise advisors can help you like they've helped millions of others. to help you retire your way with confidence. ♪ ♪ that's

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welcome back to "squawk box" this morning. the the financial times reporting that more than 10,000 private messages sent have now been had leaked online. bob bel air is former attorney at the federal trade commission. deputy white house council on the right to privacy under president ford. specializing in privacy law. good morning to you. >> good morning. >> so here's the question. we have had a number of bloomberg clients, investors, hedge fund managers analysts and others who use the terminal every day. and i'm surprised to say this they don't seem to be that concerned about these breaches.

should they be? sure. they absolutely should be. is there a legal violation? i suspect not. we haven't heard anything yet to suggest that. but this is obviously a fast breaking story. >> bob, if you were otherwise advising bloomberg lp the company, what would you tell them they need to do? >> well first, risk assessment really get their arms around what is happened and what else is likely to come out.

secondly, they need to reach out to all of their clients and terminal users and customers. third, they need obviously to change their policies and procedures to make sure that this doesn't happen again. >> to the extent that clients are not leaving in droves they are not concerned, what would be the impetus to do all of this? to me there's an ethical story as a journalist. that story is clear to me. from the business case given that customers seem so addicted to their terminals, it's not so clear they necessarily need to take some of the steps as good as they might ultimately be that you're talking about. >> well that's a great point. you can ask where are they going to go? folks are addicted to their terms tphal. ultimately, and i think bloomberg has said this. it is a matter of trust. if it isn't there, folks will

look for alternatives. that's number one. the europeans from very strict and comprehensive privacy laws. i assume that some of the terminal users are in europe. and that may present different issues. and number three, while i said there's no legal violation, a lot least not one that leaps off the page we live in an era when things go wrong, state ags, federal agencies and some of the activity that was captured as i understand it involved federal users. so i wouldn't discount entirely there won't be legalism indications. >> we will have to leave it there. thank you for your perspective this morning. the story doesn't seem to be going away. of course we will continue to follow the story. >> thank you, guys. >> david tepper 18 billion.

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. more controversy for terminal users they were up loaded. this all comes after the company executives apologized. japanese electronics maker sharp reported a loss for its latest fiscal year. executive vice president takahashi will become president and ceo as part of its business reorganization. those are the headlines. back over to you. >> thanks mandy. and they tweeted immediately. your parody account tweeted immediately into us. the national federation of business releasing the latest read on small business sentiments. steve liesman has more. >> this is one of the normal nfib ones. a strong 2.6 to a low 92.1.

the best gain since 2010. as a measure how week this good number is, we calculated this one. it's actually the 317th lowest number among the 372 since the series began in 1974. bottom line this is a weak number. let's bring in the economist who calculates this number for the nfib every month. we bring him in for his smile and his fantastic moustache and acumen. the lack of any change is really the story here. >> it gained a couple of points. this is above average for their recovery, which is 91 for our recovery. >> that's for some recovery, right? not for a normal recovery.

it looks like they still have very pessimistic views about the future of the economy. we had a major improvement and the question about business conditions six months from now. >> the expectations. >> that was negative 50. so 50% more. now it's down to minus 15. so there's a gain. >> you can see the gains took low levels. there's the average across there, the zero line right there. >> yeah. >> and it went up 13 points to a negative minus 15%. doug i want to play you some sound from jack lew. in terms of the adp data showing lack of hiring at the 50 plus

employee level. >> you know i get this question a fair amount steven. i have asked our advisers to take a look at it. they tell me based on their analysis is we have actually seen jobs growing faster than the the high intense industries. you have seen more coverage more hiring. so the evidence we have in the economy is not consistent with that. >> can you respond to that? what is the effect right now you have been able to tkpwaeupbl in terms of health care and small business? >> all the evidence we have is anecdotal at the moment. we're going to under take a major panel. but it looks like everybody is doing a couple. under 50. converting full-time workers to part-time workers.

so they will hire two people to do the work of one. which is less efficient, harder to manage. cost differences can be really huge. fast food and all of those sectors, it's going to get a lot more jobs with half the hours. >> i'm assuming a number like this is consistent with 2% gdp. >> we have had five straight months. but it's been pretty weak. hiring jumped six points. they are going to create jobs. that's a jump from zero. we should be in double digit land and we're not. so that's not looking very good. job openings didn't change.

so, you know we're not going to do it until we get customers. they don't see customers coming. we're not going to hire people. we'll hire. we're ready to do that. >> the debate i have had with joe for a long time about the biggest problem in the economy, which was demand during a very long period of time. it's no longer demand. it's tax and regulatory issues. >> it's taxes and regulatory rather than demand right now. it's not necessarily customers. >> thanks for joining us. and i'm going to stick around with the survey until it turns around, at least until it turns around. there will be a time you come on and the smile will be about the data, not about the failure. thanks, bill. >> thanks, steve. >> thanks steve and bill for that. . secretly monitored phone records of ap offices and

reporters for two months in 2012. ap calling it massive intrusion. we have more on this story. it has a lot of people talking. good morning. >> good morning, andrew. this is one of those things they are seeing could have a chilling effect on freedom of the press. ap revealing that for two months last year the department of justice secretly obtained phone records for 20 different phone lines associated with ap reporters and editors, including home phones cell phones office phones and office lines. as many as 100 different reporters use those phone lines. it comes at a time when they were investigating a position which ap revealed details about a cia operation in yemen. president and chief executive officer releasing a statement yesterday saying there could be no possible justification for

such an overbroad collection of telephone communications of the associated press and its reporters. these records potentially reveal communications with confident sources . and provide a road map to ap's news gathering operations. so, guys this one breaking late yesterday. but clearly controversy brewing over why the department of justice felt it necessary to issue subpoenas to gather this information. what's going on is the associated press was conducting an investigation into a cia operation in yemen and revealed that the cia could go in and stop a bombing plot before it happened. they were trying to figure out who the sources were. but this effort to get all 20 phone lines is overly broad and could effect other sources on other stories and it has a chilling effect on the press,

guys. >> thank you for that. crazy story. we will keep on it. top ranked hedge fund manager david tepper talks the markets, economy, and more. where he is putting his money to work. it's an interview you can't afford to miss.

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this is in addition to your exclusive story. david tepper was ranked number one hedge fund earner. we don't need to worry about, you know, that you made $2.2 billion. which is nice. you had a great return. all right. on september 24th 2010 you basically said either the economy is going to improve and stocks are going to go up or the fed is going to make sure the economy improves and stocks are going to go up. we're up almost 50% from when

you said that. i would just as an opening question i would say from here either the economy has improved and is going to continue to improve, or the fed is going to continue what it's doing to make sure it improves. i don't see why this is different or why you should be less bullish. are you still bullish? >> sure. yeah. i'm definitely bullish. look ever see the movie cousin vinnie? >> i did. years ago. >> when i was a yute. >> so there's this moment at the end of the move where where he is making the case summing it up. he sums up so many different things that the prosecution says case dismissed. because the evidence is so overwhelming. kind of like that right now. it's so overwhelming. autos are better housing is better. continuing to improve.

the fed, well before we get to the fed, australia just eased, japan, korea. these united states of america, we just are just amazed at the way these numbers work. as we go out further. so really on the tv on your show and others there's been talk about tapering. >> right. >> tapering back to fed. so the market is worried about tapering. the numbers are quite amazing. just truly amazing. the fed is going to purchase $85 billion of treasuries and mortgages a month. it is over a trillion. so over 500 in six months.

what's happened and what's really mazing is that if you look at the incomes the next six months because of tax increases, budget cuts growth in the economy and fannie mae and freddie mac pwaeug back the deficit is shrinking. this is something we can hopefully at least work on now. and i have the numbers. the next six mos def sit will be well under 100. probably closer to 85. which means -- this is an important thing. for those people who say we have been financing the deficit, we really have -- the fed will never say that. this is a pretty big issue. we have over $500 billion we're going to buy over the next six months. now we only have a deficit less than 100 the next six months.

the net issuance versus refunding is a little over 100. that means we have 400 billion, 400 billion that has to be made up. so basically think about this. that's being taken out of the market, out of the bond market. 400 billion is now in your hands, my hands and other folks's hands. and there's a few choices. it either has to go in the economy, which, you know it probably will go somewhat in the economy. it has to go to the short end of the curve trade better. we have this excess. or it has to make stocks trade higher. now, the problem is you might be worried some of that might go into the economy and, you know it might stimulate with a little bit of surge. basically, afterwards, we also have to cut back because the deficits in the future will be less than this trillion dollars. so if we don't taper back we

will get into this hyper drive market. it's backwards. the fed has to taper back. because if you look at the numbers, it's so tremendous, these numbers are so tremendous that you can have the market in sort of a hyper mode. potentially. i don't know where the money goes. do you happen who else doesn't know where the money goes. >> all along we hoped that the fed could pass the baton to the real economy. that's the way sit supposed to work. the fed is supposed to get out when the economy gets better. >> in a way you like to have a smooth market not two up too fast. so this worrying about tape thorring, there is no worrying about tapering. >> the second steve liesman comes on the air, what happens? >> if there is a true taper,

there better be a true taper. >> guys that are short better have a shovel to get themselves out. if you don't have that back to have a smooth market move. these numbers we're talking about are tremendous. >> i'm not disagreeing. i want to know what the period will look like. >> you really have to -- first off, do you have cut back purchases to get to some normal ality. never did we run close to these numbers. in 2011 or earlier did we run into these numbers where we have this net takeout. i think the fed doesn't know the effects. what they do know is that they have to move the program down.

it's almost seasonal. they should taper it down. if you don't taper it down you could go crazy. i don't know that. they don't know that. it's just a possibility. you have to expect some of it. the question will be if the market does the numbers they should be fine. they know how the flow of money is. they should be fine. the market should expect some. the question is you're not getting anything until june 19th. that's a fed meeting. so you have this excess of money in the system. so i don't have any fair -- and then you go beyond that. you look at the budget numbers. we have six wall street firms budget numbers and stuff. next year the average is about

600. and the next two years after that, 600 million deficit. and the next year is 500. you can't run a trillion and have big gaps for the whole year. the first half of the year you know, october to march, you basically have most of your spend something most of your tax receipts. and second half of the year april to october or april to september 30th. if you're the fed, what should you be doing? taper off in the first half of the year and be bigger in the second half of the year. so you have this balance of flows. i'm trying to figure out with what andrew sorkin does with 4 billion. you spend some invest some. >> with evaluations, i think

they are only so valuable to talk about. things can get overvalued and go much further. it is still a fact that it has moved 45% since you made the case the first time around. so it's not as cheap as it was. >> i have this other chart. this is a blog by the fed. you can't probably see this thing. >> if you hold it there, i think it is like the best. he has nerves of steel. >> the high points are 75 82 and now. cheapness of the market. >> equity risk. it is basically saying that when the premium is high historically you get better returns after that. one of the all time highest equity risk premiums in history. >> you can almost feel it with the nonexcitement of the entire world in equity prices and the stock market. >> look here's the joke.

to me it's a joke. i don't know how fast the economy is going to grow. it feels like it's getting better. if ecb is talking about it after the election, you will probably see more movement by the government. >> can i tell you real quickly. look at a chart at what's going on this morning. it's already beginning and the market hasn't even opened. this is just as you have been talking what's happened here in front of us. >> too bad. i like people that got winded. guys that are bearish by nature and they got wind that you were coming in today. they are classic, though. but that's not with what you're saying. >> how can you two-year extension in spain and france for austerity. where is it coming from?

next year you're still low 13 for estimated earnings. say you are 3% treasure list. at some point they can go up in yield. >> are you most bullish on the united states? is this the place to be in the world? >> i think every place is the place to be in the stott market. it doesn't mean you won't potentially have some rise in europe because it is very high. but you have the ecb and the powers being a little more pro growth. you do have it turns a little bits which is good. we're along japan. and i know you'll ask me about that. >> when did you get along japan? >> from pretty much the

beginning of the year. it's pretty good for us. >> what do you make of dan loeb's stand? >> we began with my -- i had a weight room in my office. i had a building in short hills. so i have known him a long time. dan say really goodin vestor and really smart. one of the reasons he's really smart because he knows how stupid he is. he knows his pit falls and he knows what he can and can't do. and he appreciates that. he takes a very soft approach. sony kind of opened the door for him. there's massive restructuring of a lot of japanese companies. whether sony some of the real estate companies over there. i mean we -- so many companies

restructure and increase the value. besides that if you look at earnings estimates, you know at 105, goldman sachs and others goldman is probably at the high end. so you're taking very low multiples. you really can't have -- even though that market has moved a lot, you still can have a lot in there. >> we're going to take a break. i want to talk about the great horseman of 1894 i think it was. horse manure would have been nine feet high around the planet if we didn't invent cars. >> the problem went away. >> things change. >> and we innovate. >> they can change pretty

quickly. >> like the budget deficit and this massive amount of buying. >> we'll have more with you in just a second. plus what investors will be focused on when the trading kicks off. futures have turned around. they are now pointing up since david started speaking. back on everything. everything. everything. everything. everything. everything. everything? [ all ] everything? yup! with the new staples rewards program you get 5% back on everything. everything? everything. [ male announcer ] the new staples rewards program. get free shipping and 5% back on everything your business needs. that was easy. [ male announcer ] someone said that it couldn't be done. but he with a chuckle replied that maybe it couldn't but he would be one who wouldn't say so till he tried. ♪ ♪ somebody scoffed "oh, you'll never do that." "at least no one has ever done it." but he took

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david tepper sounds off. >> are you still bullish? >> sure. i'm definitely bullish. the numbers are quite amazing. just truly amazing. more from the outspoken hedge fund manager. what is next for blackberry. >> our cnbc disruptor 50 series continues with the top "game change"er in manufacturing. we'll be joined on set by a 26-year-old ceo who is changing product adopt through crowd sourcing. the third hour of "squawk box" starts right now. welcome back to "squawk box"

on cnbc. becky quick is off today. >> i call him andrew raw sorkin. my thought that was his name. very cool name. our guest today david "the body" tepper we got our money worth so big time. >> we have tepper dan loeb. >> wait a second. it's been 45%, almost 50% since the the first tepper call. they just started rallying. >> that's what i mean. >> if you must -- >> i can read the headlines. then we get back. >> he likes dan. >> i love dan. >> dan loeb is calling for a

breakup of sony. he wants the company to spin off part of its entertainment arm. one of the biggest film studios in hollywood and one of the largest music in the world. they recommend sony sell 15% to 20% stake by selling subscription rights. and a spin-off of the insurance and other pieces of the sony business. they are up 7% 8% in the premarket. we should call that the after market. 6.5% making him the largest company shareholders almost by a factor of two if you don't include some of the japanese trusts. he hand delivered right out of a movie. he goes to tokyo and hand delivering in japan a proposal. it's not for sale. so it's disagreeing.

this is just the beginning of a process. as we were talking about in the last hour, a lot of people in the japanese market embracing, activism wall street. >> what do you think was behind the thinking of doing a hand delivery? >> it's for him hopefully a friendly way in. it's not typical lo he b letters. >> it's questioned a little. >> you have to understand -- we read between the lines of what he wants to do. the real question is ultimately does the board take it seriously. what do they do? do they start a process? i'm going to ask david about this later. do western investors pile into the stock? if they do what do they do to move the needle on the board. >> we can think about that. >> i forgot. we got our voiceover guy. don't you remember what he said? andrew ross sorkin.

too big to fail. do you remember? it was classic. it was such a good -- and "squawk box". the guy, he doesn't even live here. we send all our stuff and he voices over it. he did that for you. andrew ross sorkin. >> he's not roar. he's gentle. >> he has very pretty eyes. >> david the popper tepper over here. >> you have a pretty mouth. >> very sparkly eyes. >> he's got a pretty mouth. >> he's blushing. >> david tepper mini rally is in full play right here looking at u.s. equity futures. we are marginally higher. overseas in issue.

the japanese nikkei taking a breather. up 40%. so it could do with just a little breather i would say. as for the european markets, marginally higher. >> you decided to skip the bloomberg story? >> there was no bloomberg story. they took it away. >> back to our news maker of the morning. david tepper $17.9 apaloosa management. >> i have to plug cnbc. i put a cnbc app on my phone. it sucks the life out of my phone. >> and you and those lips i'm not going to make a comment. i'm just not going to say anything. >> bloomberg knew he would be bullish today. >> they did? >> no, no, no.

>> do you have the morning wakeup app? >> it's just for the market stuff. i think it's 99 cents. it is really good. it gives you the index, treasuries. >> do you save up for that? >> 99 cents. i saved up a long time. >> we are going to get to horse manure in a second. david eihorn said jelly doughnut is yummy. two are indulgent. three may induce tummy ache. you can have too much of a good thing and overdoses are destructive. >> so buy gold at 1900 which is what he did. >> what do you make of that? >> he's skinny so i don't know

if he's ever had a jelly doughnut. me and joe, we know jelly doughnuts. >> i'm svelte. you look at his mouth. you don't look at me. look at this. questions? >> no questions. no comments. you look beautiful. you're gorgeous. >> hit me. >> hr forbids us from touching. >> i'm small. >> you're a high sitter though. >> big personality, small? stature. >> he was commenting on david eihorn. >> yeah, yeah yeah. david is a good tkpwaoeufpltguy. he really is. he's a smart guy. listen, first off, the people who say the fed policy doesn't work it would have happened

anyway. great. might have happened. might not have happened. the private sector seems to be in pretty good shape. as soon as the question is over it's going to be really interesting second half of the year. people picking up economic forecasts. really interesting stuff. so i actually think, you know it's all worth it. the question is how are they going to get out? i'm thinking if you do get that pick up and if you get the surge in there they don't hold back from what we talked about earlier, you know i think there will be a natural way to do it. because the numbers are not as big as you think. and the gap, how they can take it down. you're going to take it down with growth naturally. at some point the feds will want the interest rates to go up. i think there's going to be a more natural path for this taking off jelly doughnuts.

>> you can follow the rally a little bit. >> if you look at other patterns. let's look at this economy for what it is. you were in a depression state when we went through the lehman collapse. you're kind of an early were stage economy. probably have yours to run in the early stage. we don't have inflation. you have room there. unemployment is high. you have room there. we have a little bit of room to run. we just had the early sector of the economy is moving. you had big rallies is housing. banks recovered. probably more in the u.s. people look for this which will come. people say there's no

renaissance. people don't do numbers right. >> of the sectors that you just mentioned, which do you see the most opportunity and where would you put your money? >> listen we think, you know, it's one of those times where the indexes are really cheap. they really are low. next year the s&p, we kind of have it in the low 13s in next year's numbers. 3% 4% run 20 times. crazy stuff. so yeah. my biggest position is citibank. you'll see it when it comes out. it's still citibank. we have a certain amount of the u.s. banks which are good sectors. we don't own commodities because we think the economy will be strong. the way it usually works is

later on we'll have as more growth picks up the economy will will pick up in 2013. i think general manufacturing, tech is cheap. individual sort of gain. >> awe lewded -- the desk wants you to know, i think you alluded that rates could normalize higher than they are now. i don't know when you think that will happen for the 10-year or mortgage rates, but will it happen in the next year? >> for mortgages, without the fed, the market has a net shrinkage of mortgage paper. okay. so there's a little bit of shortage. there's no new issuance of nonagency paper. nonagency, fannie and freddie paper. the mortgage rates are getting

better and better and better. i think that it's really a question of when the -- how good the economy gets and how fast the economy gets better. >> i hate to use this word because it will come back to haunt me in life. for all these bears out there, we may be a little bit of golden. we just may be there. probably the fed doesn't want to. it's just a smoothing mechanism to go up at a slower rate. >> to go back to a fairly low level anyway. >> you have no inflation. you're going to go up but the question is when are you going to go up? it is cash here. to be quite frankly it could be short anything. i don't like bonds long term. but good luck. >> i like the trade.

just like the japanese trade. it's finally going back up a little bit. everybody is excited. oh my god, they are falling. japanese markets are going to hell. 80 basis points. stop. stupidity is running wild. >> you started talking a little bit about manufacturing. were you leading, too, that our input is just a huge story? is that what the horse manure? >> no. >> that's a different story? >> tell the story. >> i told a story years ago, horse manure story. it was a story about the 1890s there was a big rob in the world about horse manure. horses were moving everything, popping in the cities. london times said in 50 years

the horse manure would be nine feet high on every street. they had a conference in 1898 urban conference in new york city was supposed to last two weeks. disbanded after three days because they couldn't figure out the answer to this horse manure problem. the answer was, cars came along. these guys looking at this economy, they don't want to say the economy is better. they didn't get how much the budget cuts happened. that's why we have this $400 billion thing in six months. this is tapering, there's no hammering. no hammering. there should be no hammering. you should invite it. the market is going up. the question is how fast. >> market forces provide incentives if the government doesn't mess things up. there are incentives to innovate. that's why there is still fish

in the ocean and we're still making nickel and cadmium. people love to read if we don't change our ways the earth will be ruined. it had to be global warming this time. >> we slowed down global warming a little bit although there's still a problem potentially depending how you believe it. the natural gas in the u.s. is still carbon. but it slows down. you know, it takes it away. but, look we were just talking about the u.s. the u.s. is going to have this great manufacturing renaissance. everything will be manufactured in the u.s. when we have -- when the world has a need to it. 3% world growth you won't see it. when the world picks up. people who say i haven't seen

the renaissance of the united states, give it a little time. that's just the way the numbers work. >> apple, you seem to be doubling down on apple. i don't know. it looked like you were from some of the filings. i don't know if that's right or wrong. where are you on apple now. >> we still own apple. we cut our stakes in the beginning of the year i guess around 500 sort of area. and then you know so we're -- you know it's -- it's still -- we still have a position in apple. bought a little bit below 400. just a little bit. it's okay right here. it's okay. to me it's another thing in the tech basket so to speak. more or less perform with the market on you know, i, along with everyone else is waiting to hear what they have to say as far as do they have something revolutionary in the horizon? revolutionary. or evolutionary. evolutionary, if they don't have something great and fantastic,

make a bigger screen for goodness sake. >> by the way, while you have this great, you know, sort of itunes, i forget what they call it. >> eco system. >> make a cheaper phone. that equals -- it can have a very high multiple. if you don't have it that way, go that way. if you don't have the steve jobs around to do the revolutionary sort of thing, do the evolutionary thing. now, if they don't do either we've got a problem. it's like houston, we've got a problem. so september, if they don't have either, i hope i can move fast. if they do something, that's -- >> how are you thinking about? >> we took it down. >> right. >> you know, it's another position. it's not close to like city corp. is more than twice the position of apple, for instance. so we give you -- >> and isn't it just

evolutionary changes in their products for why the stock has come down? it hasn't been revolutionary. >> they vice president done the evolution either. # samsung comes out with a big screen. i'm still waiting. hello, apple. i'm still waiting. they haven't done either. do something. one or the -- and the problem is i think, listen, i don't know the company that well. i'm not the analyst in my shop. but it seems to my you have to do one way or the other. it doesn't stop you from doing it. they have to figure out. if you don't have the next greatest thing you can still be a very very successful company. you have the best eco system.

if you whether or not at the numbers in 14 -- 15 and 16 it looks like we will be 3% deficit. >> right. >> with nominal growth the debt to gdp will be coming down. >> he said 3 trillion if we keep the sequester. do you want to keep it or not? >> keep the sequester. make the small changes like this. the stupid things they're doing. it's not -- listen and i -- some people are suffering. it's horrible. like everything else. but the thing is when you look

at the numbers you have a chance in the next couple years, the debt to gdp will come down. there's a problem with saying that. you have to do something. hopefully obama will do something with the entitles now while the democrats are in there. we have no problem in the next two, three, four five years. there is no problem. the debt to gdp will come down. it is down in 7, 8, 10 years when it really starts picking up again. joe and i start collecting retirement or whatever. >> that's like half of new jersey yourself. >> we do a lot of stuff in new jersey. >> what about -- should we just borrow a bunch of money and fix every bring in the country and build some new roads. >> listen we should -- things that need to get done get done. people will say they have this that in china. that's fantastic.

that's not what we should do. when we need things we do things. should we do more infrastructure? yeah. if we can fix the entitlements which may be the renaissance which may come in 2015 2016 supply and demand is a little better you will pick up tax revenues. i was a bull on the united states of america in 2009 when there were so few bulls. i might have been the only bull in march 2009. you know what i'm still a bull in this country. this is a great country. the chinese said -- i was with another really hedge fund guy. actually does more commodities sort of stuff. he was over in china. and he said the chinese were complaining. he said the united states are so lucky. they just have this energy thing. he said -- he's actually what is he? scandavian.

he said that's because god blesses america, you atheists. >> what would change your mind? what would make you less bullish? >> there's always things that can happen to make markets go down. middle east is a little bit of concern. you can get a 5% drop because of the war, how it's set up. i don't see that happening but it could happen. north korea settled down a little bit. i guess if -- >> sars. >> sars. >> like a hybrid swine flu. did you see that? they have a swine flu/bird flu. i worry about zombie apocalypse. >> coming from pittsburgh, that's where they did the night of the living dead. listen there may be some people in the summertime in europe because of the high unemployment. hopefully after the german elections they make moot. but if they don't, if the economies don't pick up it's

going to be tougher to hold together. >> it makes us look so good. >> >> they are seeming to recognize that. more and more they are recognizing that. the germans are giving it to some of that thought. >> you touched on u.s. housing but i don't think i got the full on david tepper version. >> i think the only thing holding it back is -- from what we hear to get the people back in the labor force. because we basically had. listen, people move on in life. and you have this huge house. housing will pick up. it's not going to back to where it was. it's not good for the economy. but hopefully, you know you do. you have housing picking up. you read about the price increases and the demands there. like i said i do believe we're in the early stage. it feels like early stage recovers. bears can't stand that.

they can't stand it. it's cousin vinnie. everybody who show shoo go look at cousin vinnie. you have to watch it. at the end. joe peschi. >> what's his name from karateratarate kid. >> what's his name? >> ralph macchio. >> i have one more for you. you own jpmorgan? >> we have a small position in jpmorgan. >> are you willing to break it up -- not break it up but split. >> as a general rule not talking about jpmorgan kphot commenting on jpmorgan, we generally recommend splitting up. now, if you have a strong lead that may suffice. i don't know the situation. it's not one of our major positions. >> definitely want one guy. i was thinking about this too. it definitely wouldn't be the the end of the world.

what is it? reed and who else at citigroup? two guys together co-counsels. you need somebody in charge. you need one guy in charge. no lead director. >> what you need is to have strong oversight. depending what the chairman's role is or the lead director you know, how it's defined, listen, part of the problem of -- still a problem in corporate america, we talk about japan. >> the board of appaloosa. >> it's a dictatorship. you still have a problem in the united states of directors who forget what they're doing. who don't know -- forget they're working for shareholders at the end of the day. they get too comfortable. and you need that strong lead director for a lot of different reasons than a bank. a lot of ways you can get in a trouble with a bank, as you well

know. ask the real tough questions. you could have had a strong lead director. it would have been not a bad thing. splitting that role. if you have something strong enough. it's a question right? >> right. >> would you guy -- i just saw tesla go up another five bucks. have you seen those? >> i don't know the financials. i don't know whether to. >> right. what do you drive? >> what do i drive? >> fisker half price. >> if it doesn't blow up in the parking lot, catch on fire something like that. >> you know what you have grown into this spot here. >> i have grown into this spot? >> yeah. you were wonderful today. >> my good friend good friend i golf with is on at noon steve weiss. i golf with him. i said, steve, i'm going on.

he said you're going on i'm coming on at noon. i love you, steve, anyway. >> those guys are shameless. >> and you guys aren't? you are the most shameless of them all on "squawk box". >> thank you. >> thank you. >> you and vinnie go out and see it. >> cousin vinnie. that's a plug. >> you don't have to be a yute. >> 1894. >> horse crisis. still ahead, breaking economic data on trade. import and export on april. 8:30 a.m. eastern, a couple minutes from now. we will continue our cnbc disruptor 50 series, top game changers. a company that's changing the paradigm for product development.

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welcome back to "squawk box", everybody. why not check on the equity futures of this hour. we were an hour ago pointed to the down side. david tepper started speaking. we have futures turning around

mildly to the upside. let's get more on this breaking news. rick santelli at the cme. steve liesman in the studio. rick i'm going to hand it over to you. give us the the numbers, please, sir. >> and the survey april import prices fell 0.5% exactly as many were expecting. if you look at last month's drop of, yes, half of 1% it was revised to down only 0.2%. so they sliced it more than half on our last look. and if we look at exports versus imports, which is always very important, exports were down 0.7, versus down 0.4%. i think from every angle we're getting a glimpse here. now here's how you split it up. are prices going down because there's less demand? are prices going down because of the commodity issues? are both those -- you know there's a subset of both of

those actually to be viewed in unison. i would once again rather see some of these numbers pick up a bit. i think on some level better activity would reflect more horsepower, just like the drop in trade deficit. we wanted to see demand. so that's really the issue for me. what's the landscape of the markets today? about the same. we have established a new range in treasuries. rumors is seemed to have stabilized. we're below 153. below 130 on the euro. outside the yen we have rearranged the deck chairs between the euro yen and dollar. not a lot going on really. back to you. >> we have a whole lot going on

there. let's try to make something out of nothing. we have steve liesman. what do you read on this? >> i don't read anything. rick is right. it's really a commodity play right now. as i argued when prices were higher the effect of the u.s. economy only at the margin. at the end of the day, the united states is a price maker not the price taker. the economy is so big and powerful globally. however, it is the first of three inflation indications we will get this week. and the only thing that is potentially wrong tepper's theory is inflation could change that outlook. the tapering the fed would do could potentially be stronger. however, the recent core pce numbers, inflation is not an

issue. global central banks have been free to do this liquidity. when i listen to tepper talk the notion of what the united states federal reserve is doing is part of it. ecb, bank of japan, the global flood of liquidity strikes me. how much is an influencing factor on all of this? >> i would say the idea is it will strengthen against the yen but nobody has a clue about the dynamic against the euro. do you agree with that? >> totally. >> everyone thought it would have been much stronger. maybe it's because of the inflation man day. all kinds of things we could throw out that the dollar has not strengthens the way expected. >> no. i like the analogy.

and i think we both used it. when it comes to the pound, euro and dollar i think of three people swimming in a round pool no matter where you go you're bumping against a wall. >> i will say i hear from my contacts that they are really looking for draghi to begin i guess a speech campaign about the euro. i don't know that they think he can do a whole lot to weaken it but they would like to see them talk it down. those rumbles are over a year old now. what they want to hear him do is weaken the euro so things like german exports will do better. now, there's a great question here mandy. which is are we going to get improvement in europe and japan on the backs of u.s. exporters. i wrote in a column on cnbc.com.

this is a major for jack lew. he has given japan a yellow light on this easing. >> everyone has given a yellow light. there was no strong language. >> right. verbal intervention. >> right. >> when is it ever sustainable? >> it doesn't work sustainably. it can work for a while. >> and he has to hurry, steve. it has to verbally manipulate his currency. once he said japan isn't doing that he has a wasting asset like an option to hurry up and commit his own sins while everyone has their fingers crossed behind their back. >> that's right. but i think the bottom line rick, nobody really understands the euro and the dollar. >> most central bankers really don't understand anything. otherwise, they would be able to explain it a whole lot better. >> we have you guys to explain it to us.

rick, steve, thanks very much. coming up manufacturing through crowd sourcing. we will continue our disruptors 50 series with the top "game change"ers in the manufacturing sector and joined on set by the founder and ceo of the pivot power. what is that? it is so awesome you're going to want one when the segment is over. i promise you. >> take a look at some highlights with our interview with david tepper that just ended. >> are you still bullish? >> sure. yeah, i'm definitely bullish. the economy is getting better. auto is better. housing is better. they can't find enough people to work. we have $500 billion we will buy the next six months and a deficit less than 100. that means we have 400 billion,

400 billion that has to be made up. so basically think about this. so that's being taken out of the market. that 400 billion is now in your hands, your hands, my hands and other folks's hands. if there is a true taper there better be a true taper. i think you might be in the last half of '99. so guys that are short, better have a shovel to get themselves out of the grave. >> is this the place to be in the world? >> i think every place is the place to be in the stock markets of the world. you have taken out the tail risk risk, disaster case.

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welcome back to "squawk box", everybody. the option to have a cup of joe with the apple boss ends today at 7:08 p.m. eastern. charity buzz is auctioning 30 to 60-minute coffee break with cook for the rfc center for justice and human rights. the current bid is $605,000 which is by the way, high enough that new bidders must verify their ability to pay before their bid will be accepted. also coming up on the show our cnbc disruptor 50 series

continues. unveil the companies that are changing the game for manufacturing and the founder and ceo of a company who wants to revolutionary the product development process. that's all coming up in just a moment.

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nice shot of times square. we're continuing our cnbc disruptor 50 series. we kicked off the reveal of our exclusive list of 50 companies that are disrupting status quo. we started off with retail disruptors. right now manufacturing. julia is here to reveal that list. take it away. >> thanks andrew. free open source technology and low cost tools are bringing manufacturing out of the confines of factories allowing anyone to create products and bring them to market. >> the 3d printing market is expected to explode into a $6.5 billion industry in the next six years. two firms poised to profit 3d printers using plastics and ceramics to print taouls jewelry, iphone accessories and more. they run $2,000.

one african man made a robo-hand. shapeways is the largest kphubg 3d marketplace with over 1 million products printed and 60,000 uploaded per month. they secured $30 million in new funding. robotics is disrupting manufacturing. it is bringing artificial intelligence to the factory floor. they allow for greater productive and reducing the need to shift jobs overseas. demand for drones to transporting goods. 3d is using open sourced

community-based model. making unmanned aerial vehicles available to all consumers in some cases for as little as $400. finally, quirky. this disruptor is changing product development, developing ideas. the people supplying the ideas also take a cut of the profits. more content online. hashtag cnbcdisruptors and disruptor 50. enterprise companies shaking things up. >> thank you, julia. quirky is more than a face in the crowd of startups.

joining us now, 26-year-old ceo and founder ben. by the way, you were on cnbc at 19 years old? >> something like that. ipod case. bottle opener/ipod case combo. the idea is products come from people all around the world we never met. people can come up with an idea all the realities around execution of that idea -- >> all i do -- how does it work? >> you submit your ideas, problem/solution. you might say, hey, this is a problem i'm trying to solve. our average product is influenced and impacted by 1,000 communities members. >> show off one of the things that you built. >> this is a product called

pivot tower. and the investor in this case jake zion 20-year-old kid from wisconsin. he said, hey, i'm looking down. i'm not using all the outlets in my power strips because of the big honking blocks. the world came together. figured out how to get it through all the regulatory stuff, manufacturing, et cetera. we put it on probably 20,000 retail shelves around the world. >> how many have you sold? >> over a million and counting. we share 10% of people who helped us make smart decisions. those people are sharing based upon their impact. >> there has to be fighting of that. >> if i go on your website.

>> about 40% of the 10% goes to the investor. if the investor has it figured out. all the information. it is ready to go the person could earn all the way up towards -- >> what is your most successful product. >> this is our most successful product. everyone looks at it and goes yes, i totally have that problem. >> do you usually know what's going to work? >> if i knew i wouldn't need the community. the best stories are the ones where i said this is a terrible idea and we sold tens of millions. >> there's video of me saying this is the worst idea ever. i was overruled. and we sold tens of millions. >> what happens to your company? do you want to sell to somebody? >> no. >> pursue an ipo. as you were saying yesterday to mr. parker himself -- >> we didn't invent the lemon.

but this is a citrus spritzer. can spray the juice out of your lemon. >> i do want that. >> we're not that good. >> if you want real demos. >> can you get this? >> this is the pluck? >> you did that too fast. i was going to let you crack -- >> yeah. i've been working out, man! >> check this out, so you can actually suck the yolk out of the egg for those that are so inclined. >> we have 500 products. how much money do you make in a year? >> that's a very personal question. >> no, no the company. >> we'll do over $50 million in revenue this year and go from

there. >> and you never answereded andrew's question. what's your exit strategy? >> it's a question that has to be asked and we want to build great products. >> ben we have to run. >> thank you for coming. >> started when you were 19 and you're 26. >>. >> we'll do another serve years. >> coming up. >> the companies that have jim cramer excited ahead of the opening bell and we'll head down to the new york stock exchange. that's coming up next. [ driver ] today, my ambulance knew all about a bike accident just by talking to a helmet. it grabbed the patient's record before we even picked him up. it found out the doctor we needed was at st. anne's. wiggle your toes. [ driver ] and it got his okay on treatment from miles away. it even pulled strings with the stoplights. my ambulance talks with smoke alarms and pilots and stadiums. but, of course it's a good listener too. [ female announcer

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a waiting room is just a room. [ static warbles ] >> welcome back to "squawk box." you're in summit jim, sometimes. let's get to the new york stock exchange. your neighbor how often do you see the -- he's around. >> not enough. not enough. he's one of the great ones and we are within a few miles of each other. he has been helpful to me since he was running the high yield in gold and i was to put clients in stuff. what? are you kidding me? stop it cramer. here's how it works. the guy has been an inspiration to a whole generation of young

people. >> you be know what the consensus would have been. the market's gone up 45%, 50% since i said it the first time and the consensus would be we've had our move and he was more bullish in this conversation than he was the first time around. >> it was moving everything. the whole country. the world, actually moved especially with his comments that the end of qe-3 will be bullish. the deficit's coming down and more money than people realize. as long as he's considered an outliar, he's going to be right. if everyone switched to his view it would be game over but we are nowhere near his view. he'll be right again. >> right. you're right because it is -- it's like all of the other people that come in and say, well not now. at this point, but they've been saying it the whole way. >> you didn't hear any of that wait for the pullback kind of thing, right?

>> no. no. >> if the fed does this -- no! here's how it's going to happen. on the one hand on the other, he is a breath of fresh air as he was when i tried to jam people. >> if you were a sell-side guy you can be called on that's one thing, but if you make $2 billion a year you don't need to keep your job. >> you did that. >> 10% under paid. the guy is just not trying to beat the index. he's trying to kill it and that's one of the reasons why he's so good. >> the story on sony. >> we need your word on sony real quick, but they're playing the music on us. >> i said it was a break up for 61 and $61 in 200 so where did that get me? >> we have several stocks on the move this morning. you choose which accounts to track and use fidelity's analytics to spot

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stock of the day, sony, andrew, ross sorkin breaking the story and breaking it into smithereens that it's too big to fail. hedge fund manager dan lobe who

is babealicious is calling for the breakup of the company. >> it's part of its investment of its entertainment arm. thanks for joining us. mandy, thank you for being here. >> not at all. always a pleasure. >> see you tomorrow. >> "squawk on the street" is next. and you won't be here. ♪ ♪ >> what a show. congratulations to squawk on a great couple of hours of staff of it. i'm carl quintanilla, jim kramer and david faber. david 10er which you heard on squawk earlier this morning as the dow now gunning for its 18th positive tuesday in a row. meanwhile, take a europe the continent is mixed here today. you have some